SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Schedule 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, For Use of
the Commission only(as
permitted by Rule 14a-
6(e)(2)
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
TEAMSTAFF, INC.
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(Name of the Corporation as Specified in Charter)
Donald T. Kelly, Secretary
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box)
/X/ No Fee Required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or form or schedule and the date
of filing.
(1) Amount previously paid:
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(2) Form schedule or registration number:
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(3) Filing party:
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(4) Dated filed:
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TEAMSTAFF, INC.
300 Atrium Drive
Somerset, New Jersey 08873
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on April 24, 2002
To the Shareholders of TEAMSTAFF, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
TEAMSTAFF, INC., (formerly Digital Solutions, Inc.) ("TeamStaff") will be held
at the Somerset Marriott, 110 Davidson Avenue, Somerset, New Jersey 08873 on
April 24, 2002 at 11:00 AM New Jersey Time, for the following purposes:
1. To elect two Class 3 Directors to TeamStaff's Board of Directors to
hold office for a period of three years or until their successors are duly
elected and qualified; and
2. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The close of business on March 12, 2002 has been fixed as the record date
("Record Date") for the determination of shareholders entitled to notice of and
to vote at, the Meeting and any adjournment thereof.
You are cordially invited to attend the Meeting. Whether or not you plan
to attend, please complete, date and sign the accompanying proxy and return it
promptly in the enclosed envelope to assure that your shares are represented at
the Meeting. If you do attend, you may revoke any prior proxy and vote your
shares in person if you wish to do so. Any prior proxy will automatically be
revoked if you execute the accompanying proxy or if you notify the Secretary of
TeamStaff, in writing, prior to the Annual Meeting of Shareholders.
By Order of the Board of Directors
Donald T. Kelly
Secretary
Dated: March 21, 2002
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
TEAMSTAFF, INC.
300 Atrium Drive
Somerset, New Jersey 08873
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 2002
This proxy statement and the accompanying form of proxy have been mailed
on or about March 22, 2002 to the shareholders of Common Stock of record of
March 12, 2002 (the "Record Date") of TEAMSTAFF, INC., a New Jersey corporation,
in connection with the solicitation of proxies by the Board of Directors of
TeamStaff for use at the Annual Meeting of shareholders to be held on April 24,
2002 at 11:00 a.m. and at any adjournment thereof.
SOLICITATION, VOTING AND REVOCABILITY OF PROXY
Shares of TeamStaff's Common Stock, par value $.001 per share, represented
by a properly executed Proxy in the accompanying form will, unless contrary
instructions are specified in the Proxy, be voted FOR the election of two Class
3 Directors to hold office for a period of three years or until their successors
are duly elected and qualified. Each share of common stock is entitled to one
vote. Voting is on a noncumulative basis.
Any proxy may be revoked at any time before it is voted. A shareholder may
revoke a proxy by submitting a proxy bearing a later date or by notifying the
Secretary of TeamStaff either in writing prior to the Annual Meeting or in
person at the Annual Meeting. Revocation is effective only upon receipt of such
notice by the Secretary of TeamStaff. Election of directors is by plurality
vote, with the two nominees receiving the highest vote totals to be elected as
directors of TeamStaff. Accordingly, abstentions and broker non-votes will not
affect the outcome of the election of directors. Abstentions and non-votes will,
however, be considered as votes represented at the Annual Meeting solely for
quorum purposes.
TeamStaff will bear the cost of the solicitation of proxies by the Board
of Directors. The Board of Directors may use the services of its executive
officers and certain directors to solicit proxies from shareholders in person
and by mail, telegram and telephone. Arrangements may also be made with brokers,
fiduciaries, custodians, and nominees to send proxies, proxy statements and
other material to the beneficial owners of TeamStaff's common stock held of
record by such persons, and TeamStaff may reimburse them for reasonable out-of-
pocket expenses incurred by them in so doing.
The Annual Report to shareholders for the fiscal year ended September 30,
2001, including financial statements, accompanies this proxy statement.
1
The principal executive offices of TeamStaff are located at 300 Atrium
Drive, Somerset, New Jersey 08873; TeamStaff's telephone number is (732)
748-1700.
INDEPENDENT PUBLIC ACCOUNTANTS; FEES PAID
For the fiscal year ended September 30, 2001, Arthur Andersen LLP,
Certified Public Accountants, served as our independent accountants.
Shareholders are not being asked to approve the selection of independent
accountants for the fiscal year ending September 30, 2002 because such approval
is not required under our Certificate of Incorporation or Bylaws. The audit
services provided by Arthur Andersen, LLP consisted of examination of financial
statements, review of filings with the Securities and Exchange Commission, and
consultation in regard to various accounting matters. Representatives of Arthur
Andersen, LLP are expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
Audit Fees. During the fiscal year ended September 30, 2001, TeamStaff
paid an aggregate of $190,500 to Arthur Andersen for fees related to the audit
of TeamStaff's financial statements.
Financial Systems Design and Implementation. During the fiscal year ended
September 30, 2001, TeamStaff paid no fees to Arthur Andersen with respect to
financial systems design or implementation.
All Other Fees. During the fiscal year ended September 30, 2001, TeamStaff
paid an aggregate of $488,000 in fees related to various tax and due
diligence/advisory fees and benefit reconciliations. These fees were as follows:
$120,000 for compliance work related to federal and state taxes
$ 62,000 for consulting services related to federal and state taxes
$290,000 for due diligence and advisory services for various acquisition
transactions; and
$ 16,000 for advisory services related to reconciliation of employee benefits
and other matters.
The Audit Committee of the Board of Directors has determined that the
services provided by Arthur Andersen and the fees paid to it for such services
has not compromised the independence of Arthur Andersen.
VOTING SECURITIES AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The securities entitled to vote at the Annual Meeting are TeamStaff's
common stock, $.001 par value. Each share of common stock entitles its holder to
one vote on each matter submitted to shareholders. The close of business on
March 12, 2002 has been fixed as the Record
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Date for the determination of shareholders entitled to notice of and to vote at
the meeting and any adjournment thereof. As of March 12, 2002, 16,474,628 shares
of common stock were issued and outstanding. Voting of the shares of common
stock is on a noncumulative basis.
The following table sets forth certain information as of March 12, 2002
with respect to each director, each of the named executive officers as defined
in Item 402(a)(3), and directors and executive officers of TeamStaff as a group,
and to the persons known by TeamStaff to be the beneficial owner of more than
five percent of any class of TeamStaff's voting securities. At March 12, 2002,
TeamStaff had 16,474,628 shares outstanding.
PERCENT OF
NUMBER OF SHARES COMPANY'S
NAME OF SHAREHOLDER CURRENTLY OWNED (1) OUTSTANDING STOCK
------------------- ------------------- -----------------
Karl W. Dieckmann (2) 95,209 .6%
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
T. Stephen Johnson (3) 264,011 1.6%
c/o T. Stephen Johnson & Associates, Inc.
3650 Mansell Road, Suite 200
Alpharetta, GA 30022
Donald W. Kappauf (4) 337,207 2.1%
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
Donald T. Kelly (5) 94,283 .6%
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
David Carroll (6) 3,334,117 20.3%
c/o Wachovia Corporation
301 South College Street
NC 0009, Suite 4000
Charlotte, NC 28202
Donald MacLeod (7) 3,334,117 20.3%
c/o Wachovia Corporation
201 South Tyron Street
NC 1012
Charlotte, NC 28202
3
PERCENT OF
NUMBER OF SHARES COMPANY'S
NAME OF SHAREHOLDER CURRENTLY OWNED (1) OUTSTANDING STOCK
------------------- ------------------- -----------------
Susan Wolken (8) 2,256,488 13.7%
c/o Nationwide Financial
One Nationwide Plaza
Mail Stop 01-12-13
Columbus, OH 43215
Martin J. Delaney (9) 41,235 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
Edmund C. Kenealy (10) 5,000 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
First Union Private Capital (11) 3,334,117 20.3%
301 South College Street
NC 0009, Suite 4000
Charlotte, NC 28288
Nationwide Financial Services (12) 2,256,488 13.7%
One Nationwide Plaza
Mail Stop 01-12-13
Columbus, OH 43215
All officers and directors as a group 6,427,550 39%
(9) persons (2,3,4,5,6,7,8,9,10)
- --------------------------
* Less than 1 percent.
1. Ownership consists of sole voting and investment power except as otherwise
noted.
2. Includes options to purchase 9,285 shares of TeamStaff's common stock, and
excludes unvested options to purchase 5,000 shares of common stock.
3. Includes an aggregate of 147,790 shares owned by or on behalf of certain
of the holder's family members and as to which shares the listed holder
expressly disclaims beneficial ownership. Excludes unvested options to
purchase 5,000 shares of common stock.
4. Includes options to purchase 214,285 shares of TeamStaff's common stock,
and excludes unvested options to purchase 200,158 shares of common stock.
4
5. Includes options to purchase 92,498 shares of TeamStaff's common stock,
and excludes unvested options to purchase 107,143 shares of common stock.
6. Includes shares owned by Wachovia Corporation (formerly First Union
Corporation) and its affiliates. Named director serves as the nominee of
First Union Corporation.
7. Includes shares owned by Wachovia Corporation (formerly First Union
Corporation) and its affiliates. Named director serves as the nominee of
First Union Corporation.
8. Includes shares owned by Nationwide Financial Services and its affiliates,
and excludes unvested options to purchase 5,000 shares of common stock.
Named director serves as the nominee of Nationwide Financial Services.
9. Includes options to purchase 8,215 shares of TeamStaff's common stock, and
excludes unvested options to purchase 5,000 shares of common stock. Also
includes warrants to purchase 10,000 shares of common stock.
10. Includes vested options to acquire 5,000 shares of TeamStaff's Common
Stock and excludes unvested options to acquire 55,000 shares of Common
Stock.
11. First Union Private Capital, an affiliate of Wachovia Corporation
(formerly First Union Corporation), obtained these shares in connection
with the acquisition of BrightLane completed as of August 31, 2001.
12. Nationwide Financial Services obtained these shares in connection with the
acquisition of BrightLane completed as of August 31, 2001.
CERTAIN REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
TeamStaff's directors and officers, and persons who own, directly or indirectly,
more than 10% of a registered class of TeamStaff's equity securities, to file
with the Securities and Exchange Commission (SEC) reports of ownership and
reports of changes in ownership of common stock and other equity securities of
TeamStaff. Officers, directors and greater than 10% shareholders are required by
SEC regulations to furnish TeamStaff with copies of all Section 16(a) forms that
they file. Based solely on review of the copies of such reports received by
TeamStaff, TeamStaff believes that all Section 16(a) filing requirements
applicable to officers, directors and 10% shareholders were complied with during
the 2001 fiscal year.
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ELECTION OF DIRECTORS
GENERAL
The discussion provided herein relates to the election of Directors of
TeamStaff. The Corporation's Certificate of Incorporation provides for the
classification of the Board of Directors into three classes of Directors, each
class as nearly equal in number as possible but not less than one Director, each
to serve for a three-year term, staggered by class. The Certificate of
Incorporation further provides that any class of directors of TeamStaff may be
removed by the shareholders only for cause by the affirmative vote of the
holders of at least 66-2/3% of the combined voting power of all outstanding
voting stock, with vacancies on the Board being filled only by the affirmative
vote of a majority of the remaining directors then in office, even if less than
a quorum, or by the sole remaining director.
The affirmative vote of a plurality of the outstanding shares of Common
Stock entitled to vote thereon, voting together as a single class at the Annual
Meeting of Shareholders is required to elect the directors. All proxies received
by the Board of Directors will be voted for the election as directors of the
nominees listed below if no direction to the contrary is given. In the event
that any nominee is unable to serve, the proxy solicited hereby may be voted, in
the discretion of the proxies, for the election of another person in his stead.
The Board of Directors knows of no reason to anticipate that this will occur. No
family relationship exists between any nominee for election as a director.
The terms of the Class 3 Directors expire at this Annual Meeting. The
present Directors of TeamStaff nominated for re-election to TeamStaff's Board of
Directors as the Class 3 Directors at the Annual Meeting are Mr. Martin Delaney
and Mr. Donald MacLeod.
In accordance with the Agreement and Plan of Merger dated as of March 6,
2001 among TeamStaff, Inc., BrightLane.com, Inc. and TeamSub, Inc., following
consummation of the transaction with BrightLane effective September 4, 2001, the
Board was reconstituted as follows:
Name Director Class Term Expires
- ---- -------------- ------------
Martin Delaney Class 3 2002
Donald MacLeod Class 3 2002
T. Stephen Johnson Class 1 2003
William Marino (1) Class 1 2003
Susan Wolken Class 1 2003
Karl Dieckmann Class 2 2004
Donald Kappauf Class 2 2004
David Carroll (2) Class 2 2004
6
(1) Mr. William Marino resigned from the Board of Directors on February 25,
2002. No person has been nominated to fill the vacancy created by Mr.
Marino's resignation. Under TeamStaff's Bylaws, the remaining members of
the Board of Directors fill all vacancies on the Board of Directors. Any
person nominated by the Board of Directors to fill the vacancy will serve
until completion of the term of the Class member being filled.
(2) Mr. David Carroll has advised the Board of Directors that he will be
resigning from the Board of Directors effective April 24, 2002. No person
has been nominated to fill the vacancy created by Mr. Carroll's impending
resignation.
The Class 3 Directors are the only Directors nominated for election at the
Annual Meeting.
DIRECTOR
POSITION WITH COMPANY CONTINUOUSLY TERM
NAME AND AGE SINCE EXPIRES
---- ------- ----- -------
CLASS 1
T. Stephen Johnson Chairman of the Board of 2001 2003
Directors, 52
Susan Wolken Director, 50 2001 2003
CLASS 2
Karl W. Dieckmann Vice Chairman, 73 1990 2004
Donald Kappauf President, Chief Executive 1998 2004
Officer, Director, 55
David Carroll* Director, 44 2001 2004
CLASS 3 (NOMINEES FOR ELECTION)
Donald MacLeod Director, 45 2001 2002
Martin Delaney Director, 58 1998 2002
T. STEPHEN JOHNSON has been Chairman of the Board of TeamStaff since
September 2001. He has served as Chairman of T. Stephen Johnson & Associates,
Inc., financial services consulting firm, and its related entities since
inception in 1986. Mr. Johnson is a long-time banking consultant and Atlanta
entrepreneur who has advised and organized dozens of community banks throughout
the Southeast. He is Chairman of the Board of Netbank, the largest and most
successful Internet-only bank, as well as Chairman and principal owner of Bank
Assets, Inc., a provider of benefit programs for directors and officers of
financial institutions. Mr.
7
Johnson is Chairman of the Board of Director, Inc., a company specializing in
providing financial services for unbanked individuals.
DAVID CARROLL has been a Director of TeamStaff since September 2001, and
is currently the Executive Vice-President and Co-Head of Merger Integration at
Wachovia Corporation. He joined Wachovia Corporation (formerly First Union
Corporation) in 1981 and has held numerous positions that include Chief
E-Commerce and Technology Officer, President of First Union-Florida and First
Union-Georgia, Vice Chairman and General Banking Group executive of First
Union-Virginia. He is currently a Board member of the Charlotte Latin School and
the Mint Museum.
MARTIN J. DELANEY joined the Board of Directors in July 1998. Mr. Delaney
is an attorney and a prominent healthcare executive who began his hospital
management career in 1971 as an Assistant Administrator at Nassau County Medical
Center. He has been a director of a large regional Health Maintenance
Organization on Long Island, the Hospital Association of New York State, the
Greater New York Hospital Association, and chairman of the Nassau- Suffolk
Hospital Council. He has been President, CEO and a director of Winthrop
University Hospital, Winthrop South Nassau University Health Care Systems, and
the Long Island Health Network. He has a graduate degree in health care
management from The George Washington University and a law degree from St.
John's University. He has been admitted to practice in New York State and
federal courts.
KARL W. DIECKMANN, a Director of TeamStaff since April 1990, had been
Chairman of the Board since November 1991. From 1980 to 1988, Mr. Dieckmann was
the Executive Vice President of Science Management Corporation and managed the
Engineering, Technology and Management Services Groups. From 1948 to 1980, Mr.
Dieckmann was employed by the Allied Signal Corporation (now Honeywell
Corporation) in various capacities including President, Semet Solvay Division;
Executive Vice President, Industrial Chemicals Division; Vice President
Technical -- Fibers Division; Group General Manager -- Fabricated Products
Division; and General Manager -- Plastics Division, as well as various positions
with the Chemicals Division.
DONALD W. KAPPAUF became President and Chief Executive Officer of
TeamStaff on December 16, 1997. Mr. Kappauf joined TeamStaff in 1990 and has
held several senior management positions including Division President and
Executive Vice President. From 1988 to 1990, Mr. Kappauf was President of Perm
Staff/Temp Staff in Princeton, New Jersey. He was Assistant Vice President of
SMC Engineering and then President of SMC Personnel Support from 1968 to 1988.
DONALD T. KELLY has been Chief Financial Officer and Vice President of
Finance since he joined TeamStaff on January 20, 1997. He was elected Corporate
Secretary in August of 1997. Mr. Kelly was Vice President and Chief Financial
Officer of Wireless Cable International and its predecessor company, Cross
Country Wireless, Inc. from 1993 to 1997. From 1987 to 1993, he was Vice
President of Finance and Administration at Potters Industries.
8
DONALD MACLEOD has been a director of TeamStaff since September 2001, and
is currently Executive Vice President and Managing Partner of Strategic Ventures
at Wachovia Corporation. He has over 25 years of banking experience, 14 of which
have been with Wachovia Corporation. Positions he has held at Wachovia
Corporation include Head of Deposit Products & Services, General Banking
Executive of Tennessee, head of Global Cash Management and Enterprise Payments
Director. Mr. MacLeod serves on the boards of Spectrum EBP, Proact Technologies,
and Arat in addition to TeamStaff. He has a bachelor's degree in Business
Administration from Vanderbilt University.
SUSAN WOLKEN has been a director of TeamStaff since September 2001. She is
the Senior Vice President of Product Management and Marketing at Nationwide
Financial. She began her Nationwide career as a life underwriter and held
several management positions in Individual Life and Health Operations. She has
held positions in sales, marketing, and administration. In 1989, she became the
Vice President of Human Resources, Senior Vice President of Human Resources,
Senior Vice President of Enterprise Administration, and most recently Senior
Vice President of Life Company Operations. She is a member of the Ohio Bar and
holds the CLU and ChFC designations. Ms. Wolken serves as director on various
boards including the Gladden Community House, The Ohio University-The Insurance
Institute Board of Advisors, and the Ohio University Alumni Board.
Pursuant to the terms of the agreement governing the acquisition of
BrightLane, Wachovia Corporation had the right to have two persons serve on the
Board of Directors. These persons are David Carroll and Donald MacLeod. Wachovia
Corporation has advised TeamStaff that it will be foregoing its right with
respect to one director. Mr. Carroll will be resigning from the Board effective
on or before the Annual Meeting. Additionally, Nationwide Financial has the
right to have one person serve on our Board. This person is Susan Wolken.
Under TeamStaff's Bylaws, (except for the position reserved for a nominee
of Wachovia Corporation) the remaining members of the Board of Directors fill
all vacancies on the Board of Directors. Any person nominated by the Board of
Directors to fill the vacancy will serve until completion of the term of the
Class member being filled. No persons have been nominated to fill the vacancies
created by the resignation of Mr. Marino or the impending resignation by Mr.
Carroll.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Karl W. Dieckmann, John H. Ewing, Martin J. Delaney and William J. Marino
served on TeamStaff's Compensation Committee during the last fiscal year ended
September 30, 2001. There are no interlocks between TeamStaff's Directors and
Directors of other companies.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
9
During the fiscal year ended September 30, 2001, the Board of Directors
met on 7 occasions and acted by written consent without a meeting on 2
occasions.
The Board of Directors has four committees: Audit, Compensation, Executive
and Nominating Committees.
For the fiscal year ended September 30, 2001, the members of the
committees, and a description of the duties of the Committees were as follows:
Audit Committee. TeamStaff's audit committee acts to: (i) review with
management the finances, financial condition and interim financial statements of
TeamStaff; (ii) review with TeamStaff's independent auditors the year-end
financial statements; (iii) review implementation with the independent auditors
and management any action recommended by the independent auditors; and (iv)
recommend to the Board of Directors the independent accountants. During the
fiscal year ended September 30, 2001, the audit committee met on four occasions.
The audit committee adopted a written charter governing its actions
effective June 14, 2000. For the period from October 1, 2000 through September
4, 2001, the members of the audit committee were Karl Dieckmann, John H. Ewing,
Charles R. Dees, Jr. and Rocco Marano. All four of these members of TeamStaff's
audit committee were "independent" within the definition of that term as
provided by Rule 4200(a)(14) of the listing standards of the National
Association of Securities Dealers.
In connection with the restructuring of the Board effective September 4,
2001, the audit committees members were changed to: David A. Carroll, Martin
Delaney, William Marino and Donald MacLeod. Donald MacLeod was elected as its
Chairman. All four of these members of TeamStaff's audit committee were
"independent" within the definition of that term as provided by Rule 4200(a)(14)
of the listing standards of the National Association of Securities Dealers. Mr.
Marino resigned from the Board of Directors in February, 2002.
The audit committee adopted a written charter governing its actions
effective June 14, 2000. The charter of the audit committee of TeamStaff
appeared in full as Appendix I of TeamStaff's proxy statement for its 2000
Annual Meeting.
The audit committee hereby states that it:
- has reviewed and discussed the audited financial statements with
TeamStaff's management;
- has discussed with TeamStaff's independent auditors the matters
required to be discussed by SAS 61, as may be modified or
supplemented;
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- has received the written disclosures and the letter from the
independent accountants required by Independence Standards
Board Standard No. 1, as may be modified or supplemented, and
has discussed with the independent accountants the independent
accountant's independence; and
- has recommended to the board of directors of TeamStaff that
the audited financial statements be included in TeamStaff's
Annual Report on Form 10-K for the fiscal year ended September
30, 2001 for filing with the Commission.
The Audit Committee
David A. Carroll
Martin Delaney
Donald MacLeod
Compensation Committee. The members of the compensation committee for the
period from October 1, 2000 through September 4, 2001 were Karl W. Dieckmann,
John H. Ewing, William J. Marino and Martin J. Delaney. The compensation
committee functions include administration of TeamStaff's 2000 Employee Stock
Option Plan and Non-Executive Director Stock Option Plan and negotiation and
review of all employment agreements of executive officers of TeamStaff. In
connection with the restructuring of the Board effective September 4, 2001, the
compensation committees members were changed to: Karl W. Dieckmann, T. Stephen
Johnson and Martin J. Delaney and T. Stephen Johnson was elected as its
chairman. During the fiscal year ended September 30, 2001, the committee met on
two occasions.
Nominating Committee. The members of the nominating committee for the
period from October 1, 2000 through September 4, 2001 were Karl W. Dieckmann,
Donald W. Kappauf and William J. Marino. The nominating committee functions
include the review of all candidates for a position on the board of directors
including existing directors for renomination and reports its findings with
recommendations to the Board. The nominating committee solicits candidates on
behalf of TeamStaff to fill any vacancy on the Board. The nominating committee
performs such other duties and assignments as directed by the Chairman or the
Board but shall have no power to add or remove a director without the approval
of the Board. In connection with the restructuring of the Board effective
September 4, 2001, the nomination committees members were changed to: Donald W.
Kappauf, William J. Marino, David Carroll and Susan A. Wolken and Donald W.
Kappauf was elected its chairman. During the fiscal year ended September 30,
2001, the committee met on one occasion. Mr. Marino resigned from the Board of
Directors in February 2002.
Executive Committee. The Board of Directors created an Executive Committee
effective September 4, 2001. The members are T. Stephen Johnson, Karl W.
Dieckmann and Donald W. Kappauf and T. Stephen Johnson serves as its chairman.
This committee did not meet during the fiscal year ended September 30, 2001.
11
No member of the Board of Directors or any committee failed to attend or
participate fewer than 75% in meetings of the Board or committee on which such
member serves.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following provides certain summary information concerning compensation
paid or earned by TeamStaff during the years ended September 30, 2001, 2000 and
1999 to TeamStaff's Chief Executive Officer and each of the executive officers
of TeamStaff who received in excess of $100,000 in compensation during the last
fiscal year.
LONG TERM
ANNUAL COMPENSATION COMPENSATION
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL SALARY BONUS COMPENSATION UNDERLYING
POSITION YEAR $ $ $ OPTIONS/SARS #
Donald W. Kappauf, 2001 $267,130 $200,000 $46,268 300,000
Chief Executive Officer 2000 $230,126 $ 0 $17,251 57,143
1999 $225,154 $175,500 $14,876 14,286
Donald T. Kelly 2001 $177,247 $100,000 $18,172 150,000
Chief Financial Officer 2000 $165,000 $ 0 $12,231 14,286
1999 $157,115 $ 87,800 $ 6,000 14,286
Kenneth J. Jankowski 2001 $185,616 $ 0 $19,305 0
President-PEO
Division (1)
Elizabeth Hoaglin 2001 $ 95,159 $173,885 $ 3,600 10,000
President of TeamStaff 2000 $ 86,662 $ 92,050 $ 3,600 4,286
Rx Division 1999 $ 67,362 $ 40,000 $ 3,600 2,858
Edmund Kenealy 2001 $107,200 $ 15,000 $ 5,966 10,000
General Counsel (2)
(1) No longer employed by TeamStaff effective October 2001.
(2) See Employment Agreements discussion below. Mr. Kenealy was hired
effective October 2, 2000.
The Company provides normal and customary life and health insurance
benefits to all of its employees including executive officers. The Company has a
401(k) plan that is voluntary. Other annual compensation includes payments for
automobile allowances.
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COMPENSATION OF DIRECTORS
Directors who are employees of TeamStaff are not compensated for services
in such capacity except under the Director Plan, as defined below; provided,
however, T. Stephen Johnson, our Chairman, and Karl Dieckmann, our Vice
Chairman, each receive $2,500 per month. Non-Employee Directors receive $1,500
per board meeting and $1,000 per non-board meeting, related travel expenses, and
$600 for each committee meeting. Directors may also receive $1,000 per meeting
with executives which do not constitute Board or Committee meetings. The
Directors' Plan also provides that directors, upon joining the Board, and for
one (1) year thereafter, will be entitled to purchase restricted stock from
TeamStaff at a price equal to 80% of the closing bid price on the date of
purchase up to an aggregate purchase price of $50,000.
EMPLOYMENT AGREEMENTS
TeamStaff entered into a new employment agreement with Mr. Donald Kappauf
effective April 2, 2001 which replaced his existing agreement which would have
expired on September 30, 2001. Mr. Kappauf will continue to serve as the
TeamStaff's President and Chief Executive Officer at his current salary of
$230,000 and will receive: (i) an increase in annual compensation to $300,000
commencing on September 1, 2001, and increasing yearly thereafter at the
discretion of the compensation committee; and (ii) a bonus based on the
achievement of certain performance criteria as determined by the compensation
committee. The terms of Mr. Kappauf's employment agreement also provides for
participation in a "split dollar lief insurance agreement" whereby Mr. Kappauf
will receive annual lump sum payments equal to approximately one-third of his
2000 annual salary for a period of 15 years, commencing at age 65. TeamStaff
pays the premiums on the insurance policy. Payments are also subject to a
vesting period of up to 7 years (2007 fully vested) for employment by TeamStaff.
Further, vesting is deemed fully satisfied in the event of a change of control
of TeamStaff and there is a material change in his employment duties within two
years of the change of control. In addition, Mr. Kappauf continues to receive
certain other benefits including insurance benefits, a car allowance and
participation in a supplemental executive retirement plan. Mr. Kappauf was also
awarded options to purchase 300,000 shares of the TeamStaff's common stock
exercisable at $4.625 per share and subject to certain vesting requirements.
TeamStaff entered into a new employment agreement with Mr. Donald Kelly
effective April 2, 2001 which replaced his existing agreement which would have
expired on September 30, 2001. Mr. Kelly will continue to serve as the
TeamStaff's Secretary and Chief Financial Officer at his current salary of
$170,000 and will receive: (i) an increase in annual compensation to $200,000
commencing on September 1, 2001, and increasing yearly thereafter at the
discretion of the compensation committee; and (ii) a bonus based on the
achievement of certain performance criteria as determined by the compensation
committee. The terms of Mr. Kelly's employment agreement also provides for
participation in a "split dollar lief insurance agreement" whereby Mr. Kelly
will receive annual lump sum payments equal to approximately one-third of his
2000
13
annual salary for a period of 15 years, commencing at age 65. TeamStaff pays the
premiums on the insurance policy. Payments are also subject to a vesting period
of up to 7 years (2007 fully vested) for employment by TeamStaff. Further,
vesting is deemed fully satisfied in the event of a change of control of
TeamStaff and there is a material change in his employment duties within two
years of the change of control. In addition, Mr. Kelly continues to receive
certain other benefits including insurance benefits, a car allowance and
participation in a supplemental executive retirement plan. Mr. Kelly was also
awarded options to purchase 150,000 shares of TeamStaff's common stock
exercisable at $4.625 per share and subject to certain vesting requirements.
TeamStaff entered into an employment agreement with Mr. Edmund C. Kenealy
effective October 2, 2000 under which Mr. Kenealy presently serves as General
Counsel, at an annual salary of $125,000 effective commencing October 1, 2001.
In addition, Mr. Kenealy is entitled to receive: (i) a yearly increase in annual
compensation at the discretion of the compensation committee; and (ii) a bonus
to be determined based on the achievement of certain performance criteria as
determined by the compensation committee. Mr. Kenealy receives certain other
benefits including insurance benefits, a car allowance of $500 per month and
annual vacation. Mr. Kenealy has also been awarded options to purchase 60,000
shares of TeamStaff's common stock exercisable subject to certain vesting
requirements.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
Potential Realizable
Value At Assumed
Annual Rates of Stock
Price Appreciation for
Option Term
NO. OF PERCENTAGE OF EXERCISE
SECURITIES TOTAL OF BASE EXPIRATION 5% ($) 10% ($)
UNDERLYING OPTIONS/ PRICE PER DATE (F) (G)
NAME OPTIONS GRANTED IN SHARE
GRANTED FISCAL YEAR
Donald Kappauf 300,000 50% $4.6250 04/02/2000 $383,000 $847,000
Donald Kelly 150,000 25% $4.6250 04/02/2006 $192,000 $424,000
Elizabeth Hoaglin 10,000 2% $3.4688 10/02/2005 $ 10,000 $ 21,000
Edmund Kenealy 10,000 2% $3.4688 10/02/2005 $ 10,000 $ 21,000
14
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information with respect to the named
executive officers concerning exercise of stock options and SARs during the last
fiscal year and the value of unexercised options and SARs held as of the year
ended September 30, 2001.
NUMBER OF
SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY OPTIONS
UNEXERCISED AS OF SEPTEMBER 30,
OPTIONS/SARS 2001
SEPTEMBER 30,
2001
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
Donald W. Kappauf 14,128 $95,788 214,285/200,156 $1,326,429/$972,707
Donald T. Kelly 0 $ 0 94,284/107,142 $ 442,139/$663,209
Elizabeth Hoaglin 0 $ 0 14,999/2143 $ 92,844/13,265
Edmund Kenealy 0 $ 0 0/10,000 $ 0/61,900
(1) Based upon a closing bid price of the Common Stock at $6.19 per share on
September 28, 2001.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the compensation committee of the Board of
Directors of TeamStaff. During the fiscal year ended September 30, 2001, the
compensation committee was responsible for reviewing TeamStaff's stock plans and
reviewing and approving compensation matters concerning the executive officers
and key employees of TeamStaff.
Overview and Philosophy. TeamStaff uses its compensation program to achieve the
following objectives:
- To provide compensation that attracts, motivates and retains the
talented, high caliber officers and employees necessary to achieve
TeamStaff's strategic objectives, as determined by the compensation
committee;
15
- To align the interest of officers with the success of TeamStaff;
- To align the interest of officers with stockholders by including
long-term equity incentives; and
- To increase the long-term profitability of TeamStaff and,
accordingly, increase stockholder value.
Compensation under the executive compensation program is comprised of cash
compensation in the form of base salary, bonus compensation and long-term
incentive awards, generally in the form of options to purchase common stock. In
addition, the compensation program includes various other benefits, including
medical and insurance plans, TeamStaff's 401(k) Plan and the employee stock
option incentive plans, which plans are generally available to all employees of
TeamStaff. In addition, the committee considers the eligibility of certain
executive officers in a supplemental executive retirement plan ("SERP Plan").
The principal factors which the compensation committee considered with
respect to each officer's compensation package for fiscal year ended September
30, 2001 are summarized below. The compensation committee may, however, in its
discretion, apply different or additional factors in making decisions with
respect to executive compensation in future years.
Base Salary. Compensation levels for each of TeamStaff's officers,
including the Chief Executive Officer, are generally set within the range of
salaries that the compensation committee believes are paid to officers with
comparable qualifications, experience and responsibilities at similar companies.
In setting compensation levels, the compensation committee takes into account
such factors as (i) TeamStaff's past performance and future expectations, (ii)
individual performance and experience and (iii) past salary levels. The
compensation committee does not assign relative weights or ranking to these
factors, but instead makes a determination based upon the consideration of all
of these factors as well as the progress made with respect to TeamStaff's
long-term goals and strategies. Base salary, while reviewed annually, is only
adjusted as deemed necessary by the compensation committee in determining total
compensation for each officer. Base salary levels for each of TeamStaff's
officers, other than the Chief Executive Officer, were also based in part upon
evaluations and recommendations made by the Chief Executive Officer.
Additionally, certain executives, including Donald Kappauf, the Chief Executive
Officer, Donald Kelly, the Chief Financial Officer, and Edmund Kenealy, General
Counsel, have existing employment agreements with TeamStaff which set forth
certain levels of base salary and bonus compensations.
Equity Incentives. The compensation committee believes that stock
participation aligns officers' interests with those of the stockholders. In
addition, the compensation committee believes that equity ownership by officers
helps to balance the short term focus of annual incentive compensation with a
longer term view and may help to retain key executive officers.
16
Long term incentive compensation, generally granted in the form of stock
options, allows the officers to share in any appreciation in the value of
TeamStaff's common stock.
In making stock option grants, the compensation committee considers
general corporate performance, individual contributions to TeamStaff's
financial, operational and strategic objectives, the Chief Executive Officer's
recommendations, level of seniority and experience, existing levels of stock
ownership, previous grants of restricted stock or options, vesting schedules of
outstanding restricted stock or options and the current stock price. With
respect to the compensation determination for the fiscal year ended September
30, 2001, the compensation committee believes that the current stock ownership
position of the executive officers was sufficient to achieve the benefits
intended by equity ownership. During the fiscal year ended September 30, 2001,
the employment agreements for Mr. Kappauf and Mr. Kelly were restructured and
pursuant to these agreements received, 300,000 options and 150,000 options,
respectively. Mr. Kenealy received 10,000 options in the fiscal year ended
September 30, 2001 which were granted in connection with his joining TeamStaff
as a result of TeamStaff's acquisition of HR2, Inc in October 2000. Ms. Hoaglin
also was granted 10,000 options for performance related to the TeamStaff Rx
subsidiary of which she is President.
Other Benefits. TeamStaff also has various broad-based employee benefit
plans. Executive officers participate in these plans on the same terms as
eligible, non-executive employees, subject to any legal limits on the amounts
that may be contributed or paid to executive officers under these plans.
TeamStaff offers a stock incentive plan and a 401(k) plan, which allows
employees to invest in a wide array of funds on a pre-tax basis. TeamStaff also
maintains insurance and other benefit plans for its employees, including
executive officers of TeamStaff.
The compensation committee determined that the 401(k) plan did not provide
sufficient retirement benefits to its top executive officers, including its
Chief Executive Officer and Chief Financial Officer. Accordingly, during the
last fiscal year the compensation committee created the SERP Plans to provide
retirement benefits comparable with plans offered executives in comparable
positions at other companies.
Chief Executive Officer Compensation. In the fiscal year ended September
30, 2001, Mr. Donald Kappauf, Chief Executive Officer, received a salary of
$267,130 which represents an increase of approximately 16% from the prior year.
In the fiscal year ended September 30, 2000, Mr. Kappauf received a base salary
of $230,126, which represents a 2.2% increase from his base salary in the fiscal
year ended September 30, 1999. The base salary is believed by the compensation
committee to be consistent with the range of salary levels received by
executives in a similar capacity in companies of comparable size. In addition,
Mr. Kappauf received a bonus of $200,000 during the fiscal year ended September
30, 2001. The terms of Mr. Kappauf's employment compensation are determined
primarily pursuant to his employment agreement which was entered into in April
2001. Among other things, the employment agreement provides
17
for the payment of certain bonuses based upon performance by TeamStaff,
including earnings per share. The bonus payment was made in accordance with the
employment agreement terms.
Tax Deductibility of Executive Compensation. Section 162(m) of the Code
limits the tax deduction to TeamStaff to $1 million for compensation paid to any
of the executive officers unless certain requirements are met. The compensation
committee has considered these requirements and the regulations. It is the
compensation committee's present intention that, so long as it is consistent
with its overall compensation objectives, substantially all executive
compensation be deductible for United States federal income tax purposes. The
compensation committee believes that any compensation deductions attributable to
options granted under the employee stock option plan currently qualify for an
exception to the disallowance under Section 162(m). Future option grants to
executive officers under each of the TeamStaff employee stock option plans will
be granted by the compensation committee.
By the Compensation Committee of
of the Board of Directors of TeamStaff, Inc.
T. Stephen Johnson
Karl W. Dieckmann
Martin Delaney
* Messrs. Rocco Marano and John Ewing were members of the Compensation Committee
during most of the fiscal year ended September 30, 2001 but resigned from the
Board of Directors effective September 4, 2001.
18
STOCK OPTION PLANS
In April 1990, the Board of Directors adopted the 1990 Employees Stock
Option Plan (the "1990 Plan") which was approved by shareholders in August 1990.
The 1990 Plan provided for the grant of options to purchase up to 285,714 shares
of TeamStaff's common stock. Under the terms of the 1990 Plan, options granted
thereunder may be designated as options which qualify for incentive stock option
treatment ("ISOs") under Section 422A of the Code, or options which do not so
qualify ("Non-ISO's").
In April 1990, the Board of Directors adopted the Non-Executive Director
Stock Option Plan (the "Director Plan") which was approved by shareholders in
August, 1991 and amended in March 1996. The Director Plan provided for issuance
of a maximum of 142,857 shares of common stock upon the exercise of stock
options arising under the Director Plan.
In April 1990, the Board of Directors adopted and in August, 1990,
TeamStaff's shareholders approved the Senior Management Incentive Plan (the
"Management Plan") for use in connection with the issuance of stock, options and
other stock purchase rights to executive officers and other key employees and
consultants who render significant services to TeamStaff and its subsidiaries. A
total of 1,428,571 shares of common stock were reserved for issuance under the
Management Plan.
2000 EMPLOYEE STOCK OPTION PLAN
In the fiscal year 2000, the Board of Directors and shareholders approved
the adoption of the 2000 Employees Stock Option Plan (the "2000 Plan") to
provide for the grant of options to purchase up to 1,714,286 shares of
TeamStaff's common stock to all employees, including senior management. The 2000
Plan replaces the 1990 Employee Plan and Senior Management Plans, both of which
expired. Under the terms of the approved 2000 Plan, options granted thereunder
may be designated as options which qualify for incentive stock option treatment
("ISOs") under Section 422A of the Code, or options which do not so qualify
("Non-ISO's").
The 2000 Plan is administered by the Compensation Committee designated by
the Board of Directors. The Compensation Committee has the discretion to
determine the eligible employees to whom, and the times and the price at which,
options will be granted; whether such options shall be ISOs or Non-ISOs; the
periods during which each option will be exercisable; and the number of shares
subject to each option. The Committee has full authority to interpret the 2000
Plan and to establish and amend rules and regulations relating thereto.
Under the 2000 Plan, the exercise price of an option designated as an ISO
shall not be less than the fair market value of the common stock on the date the
option is granted. However, in the event an option designated as an ISO is
granted to a ten percent (10%) shareholder (as defined in the 2000 Plan), such
exercise price shall be at least 110% of such fair market value. Exercise prices
of Non-ISO options may be less than such fair market value.
19
The aggregate fair market value of shares subject to options granted to a
participant, which are designated as ISOs and which become exercisable in any
calendar year, shall not exceed $100,000.
The Compensation Committee may, in its sole discretion, grant bonuses or
authorize loans to or guarantee loans obtained by an optionee to enable such
optionee to pay the exercise price or any taxes that may arise in connection
with the exercise or cancellation of an option. The Compensation Committee can
also permit the payment of the exercise price of the options using the common
stock of TeamStaff held by the optionee for at least six months prior to
exercise.
NON-EXECUTIVE DIRECTOR PLAN
In fiscal 2000, the Board of Directors and stockholders approved the
adoption of the 2000 Non-Executive Director Stock Option Plan (the "Director
Plan") to provide for the grant of options to non-employee directors of
TeamStaff. Under the terms of the Director Plan, each non- executive director is
automatically granted an option to purchase 5,000 shares upon joining the Board
and each September lst, pro rata, based on the time the director has served in
such capacity during the previous year. The Director Plan also provides that
directors, upon joining the Board, and for one (1) year thereafter, will be
entitled to purchase restricted stock from TeamStaff at a price equal to 80% of
the closing bid price on the date of purchase up to an aggregate purchase price
of $50,000. The Director Plan replaced the previous Director Plan that expired
in April 2000.
Under the Director Plan, the exercise price for options granted under the
Director Plan shall be 100% of the fair market value of the common stock on the
date of grant. Until otherwise provided in the Stock Option Plan, the exercise
price of options granted under the Director Plan must be paid at the time of
exercise, either in cash, by delivery of shares of common stock of TeamStaff or
by a combination of each. The term of each option commences on the date it is
granted and unless terminated sooner as provided in the Director Plan, expires
five (5) years from the date of grant. The Committee has no discretion to
determine which non-executive director or advisory board member will receive
options or the number of shares subject to the option, the term of the option or
the exercisability of the option. However, the Committee will make all
determinations of the interpretation of the Director Plan. Options granted under
the Director Plan are not qualified for incentive stock option treatment.
20
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth herein is a line graph comparing the total returns (assuming
reinvestment of dividends) of TeamStaff's common stock, the Standard and Poor
Industrial Average, and an industry composite consisting of a group of four peer
issuers selected in good faith by TeamStaff. The Company's common stock is
listed for trading in the Nasdaq National Market and is traded under the symbol
"TSTF".
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100
SEPTEMBER 2001
[Line Graph]
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Teamstaff Inc Return % -50.58 -50.02 3.01 -10.20 80.07
Cum $ $100.00 $ 35.42 $ 17.70 $ 18.23 $ 16.37 $ 29.48
S & P 500 Return % 40.45 9.05 27.81 13.28 -26.63
Cum $ $100.00 $140.45 $153.15 $195.74 $221.74 $162.70
Peer Group Only Return % -16.42 -16.83 -45.17 129.31 -33.50
Cum $ $100.00 $ 83.58 $ 69.51 $ 38.12 $ 87.40 $ 58.12
Peer Group + TSTF Return % -20.46 -17.99 -44.14 121.14 -30.76
Cum $ $100.00 $ 79.54 $ 65.23 $ 36.44 $ 80.58 $ 55.79
NOTES
(1) Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on September 30, 1996 and that dividends were
reinvested at years ended September 30.
(2) Industry composite includes Employee Solutions, Administaff, Gevity HR,
and TeamMucho Corp. The industry composite has been determined in good
faith by management to represent entities that compete with the Company in
certain of its significant business segments. Management does not believe
there are any publicly held entities that compete with all the Company's
business segments.
21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information concerning employment agreements with and compensation of
TeamStaff's executive officers and directors, see "Executive Compensation". The
Directors' Plan provides that directors, upon joining the Board, and for one (1)
year thereafter, will be entitled to purchase restricted stock from TeamStaff at
a price equal to 80% of the closing bid price on the date of purchase up to an
aggregate purchase price of $50,000.
Effective August 31,2001, TeamStaff, Inc. completed its acquisition of
BrightLane. As a result of a reverse subsidiary merger with a subsidiary of
TeamStaff, BrightLane is now a wholly-owned subsidiary of TeamStaff.
Other than payments for fractional shares, the shareholders of BrightLane
received an aggregate of 8,066,522 shares of TeamStaff's Common Stock in
exchange for their BrightLane Common Stock, Series A Preferred, Series B
Preferred and Series C Preferred stock. The exchange ratios (rounded) and
aggregate shares for the classes of BrightLane capital stock were as follows:
Title of BrightLane Aggregate
Capital Stock Exchange Ratio TeamStaff Shares
-------------------- -------------- ----------------
Common Stock 0.2314549 1,601,622
Series A Preferred Stock 22.7740000 874,295
Series B Preferred Stock 1.9410000 3,334,117
Series C Preferred Stock 4.2050000 2,256,488
TOTAL 8,066,522
In connection with the transaction, persons holding BrightLane options to
acquire approximately 2,078,000 BrightLane shares (the equivalent of
approximately 481,000 TeamStaff shares) exercised their options. TeamStaff made
recourse loans of approximately $1,025,000 principal amount to the holders of
these options to assist them in payment of tax obligations incurred with
exercise of the options. The loans are repayable upon the earlier of (i) sale of
the TeamStaff shares or (ii) three years.
Wachovia Corporation (formerly First Union Corporation), through an
affiliate, held all of the BrightLane Series B Preferred stock, and therefore
owns 3,334,117 shares of TeamStaff's Common Stock (approximately 20%). In
addition, Nationwide Financial Services, Inc. held all of the BrightLane Series
C Preferred stock, and therefore owns 2,256,488 shares of TeamStaff's Common
Stock (approximately 14%).
Under the terms governing the transaction, certain option holders were
restricted from selling TeamStaff shares acquired from the exercise of their
BrightLane options for a period of
22
up to two years. T. Stephen Johnson and his spouse, Mary Johnson, also a former
director of BrightLane, were the only option holders who exercised their options
and who were subject to these lockup provisions. Due to the recent significant
rise in TeamStaff's stock price and the significant increase in the amount of
the tax loans to be made to T. Stephen Johnson and Mary Johnson, the Board of
Directors of TeamStaff concluded it would be more appropriate to allow Mr. and
Mrs. Johnson to sell a portion of their TeamStaff shares to cover their tax
liability rather than carry a large loan receivable on TeamStaff's financial
statements. The Board therefore agreed to allow the sale of up to 40% of Mr. and
Mrs. Johnson's option shares (approximately 56,230 TeamStaff shares) as an
exempt transaction under SEC Rule 16(b)(3).
In addition, three persons who served as directors of TeamStaff, namely
John H. Ewing, Rocco J. Marano and Charles R. Dees, Jr. agreed to step down as
directors upon consummation of the transaction with BrightLane. Effective
September 4, 2001, these persons resigned as directors. In connection with the
termination of their services, these individuals received 1,000 warrants for
each year of service on the TeamStaff Board of Directors (an aggregate of 16,000
warrants). The grant of the warrants was approved by the Board of Directors as
an exempt transaction under SEC Rule 16(b)(3).
In addition, the Board of Directors was reconstituted effective September
4, 2001 as a result of the acquisition of BrightLane.
In July, 2001, Mr. Donald Kappauf, Chief Executive Officer, exercised
options to acquire 14,128 shares of Common Stock. In connection with this option
exercise, Mr. Kappauf received a loan in the principal amount of $95,788.00
which was used by him to pay the exercise price of the options. The loan
provides for repayment in five years, bears interest at 5% per annum and is
secured by the shares of Common Stock.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at TeamStaff's 2003
Annual Meeting of Shareholders must be received by TeamStaff on or before
December 22, 2002 to be eligible for inclusion in TeamStaff's proxy statement
and form of proxy to be used in connection with the 2003 Annual Meeting of
Shareholders.
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM l0-K FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2001 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL
BE FURNISHED WITHOUT THE ACCOMPANYING EXHIBITS TO SHAREHOLDERS WITHOUT CHARGE
UPON WRITTEN REQUEST THEREFORE SENT TO DONALD T. KELLY, SECRETARY, TEAMSTAFF,
INC., 300 ATRIUM DRIVE, SOMERSET, NEW JERSEY 08873. Each such request must set
forth a good
23
faith representation that as of March 12, 2002, the person making the request
was the beneficial owner of common stock of TeamStaff entitled to vote at the
Annual Meeting of Shareholders.
OTHER BUSINESS
As of the date of this Proxy Statement, the only business which the Board
of Directors intends to present, and knows that others will present, at the
Annual Meeting is that herein above set forth. If any other matter or matters
are properly brought before the Annual Meeting, or any adjournments thereof, it
is the intention of the persons named in the accompanying form of proxy to vote
the proxy on such matters in accordance with their judgment.
By Order of the Board of Directors
Donald T. Kelly
March 21, 2002 Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND
RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF
IT IS MAILED IN THE UNITED STATES OF AMERICA.
24
TEAMSTAFF, INC.
ANNUAL MEETING OF SHAREHOLDERS - APRIL 24, 2002
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints T. Stephen Johnson, Karl W. Dieckmann and Donald
W. Kappauf, and each of them, proxies, with full power of substitution, to vote
all shares of common stock of TeamStaff, Inc owned by the undersigned at the
Annual Meeting of Shareholders of TeamStaff, Inc. to be held on April 24, 2002
and at any adjournments thereof, hereby revoking any proxy heretofore given. The
undersigned instructs such proxies to vote:
I. ELECTION OF DIRECTORS
FOR all Nominees listed WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below) |_| nominees listed below |_|
(Instruction: Please check appropriate box. To withhold authority for any
individual nominee, strike a line through the nominee's name in the list below.)
NOMINEES FOR CLASS 3 DIRECTORS
Martin Delaney
Donald MacLeod
and to vote upon any other business as may properly become before the meeting or
any adjournment thereof, all as described in the proxy statement dated March 21,
2002, receipt of which is hereby acknowledged.
Either of the proxies or their respective substitutes who shall be present and
acting shall have and may exercise all the powers hereby granted. The shares
represented by this proxy will be voted FOR the election of two (2) directors
unless contrary instructions are given. Said proxies will use their discretion
with respect to any other matters which properly come before the meeting.
Date______________________________________
Signed____________________________________
(Please date and sign exactly as accounts.
Each joint owner should sign. Executors,
administrators, trustees, etc. should also
so indicate when signing.)
The proxy is solicited on behalf of the
Board of Directors. Please sign and return
in the enclosed envelope.
